Africa Faith Leaders Urge Passage of New York Taxpayers and International Debt Crises Protection Act (S4747, A2970)
African Catholic bishops, representing 23 countries, issued a statement to G7 leaders to take action on debt crises, development bank reform and greater aid for the continent hit by multiple crises. Finance ministers and central bank governors of the group meet this week, May 11th through 13th. Japan will host G7 ministers and presidents in Hiroshima on May 19th - 21st.
The bishops raised Pope Francis’ call for effective and reliable processes to alleviate unpayable debts and advocated that private creditors participate in debt relief.
“The G7 include the major debt issuance jurisdictions that need to coordinate domestic legal reforms to deter [private] creditor litigation against countries renegotiating debts,” said the bishops. “Prompt passage of the New York Taxpayer and International Debt Crises Protection Act will do that for the large share of debt issued in that jurisdiction, and offers a simple and effective model other G7 countries can follow.”
New York State law governs more than 52% of contracts held by private creditors. Legislation pending in the state legislature and introduced by Senator Brad Hoylman-Sigal and Assemblymember Patricia Fahy would bring private creditors into international debt reduction agreements.
To prevent future debt crises, the faith leaders asked for greater use of debt contracts that increase risk-sharing between the borrowers and creditors, in the context of all types of lending.
African bishops commented on proposals that could expand multilateral development bank lending, currently under consideration by the G20. Since last year, shareholders led by the US and other G7 countries led a request for the World Bank to “evolve” through changes in its mission, operations and finances.
“[W]e approach with caution the intention to add new missions when the old ones – primarily poverty reduction and human development – remain so far from being fulfilled,” added the faith leaders. “Without an extremely bold injection of resources, such additions can only come at the expense of existing poverty reduction and development priorities in the places where they are most pressing.”
They also called for more African participation in the decisions on World Bank future.
The high-level religious leaders referred to the issuance of $650 in emergency liquidity currency – Special Drawing Rights – in 2021. More than $400 billion SDRs went to developed countries and only $33 billion to Africa. The IMF has two lending facilities that can receive SDR contributions to finance loans to developing countries.
“It is. . . essential to rethink Special Drawing Rights (SDRs) as an instrument of finance, and rechannel a significant portion of those held by wealthy countries to Africa,” stated the bishops.
The African Development Bank put forward a proposal for advanced economies’ SDR contributions to fund lending in the region, which the G7 currently considers.
“Africa's religious leaders know poverty in Africa because they lead so many major social services across the continent to alleviate poverty,” said Eric LeCompte, Executive Director of Jubilee USA Network, which supports Africa's Catholic Bishops in their advocacy. "Africa's religious leaders are positioned to explain to the G7 the need to address Africa's multiple crises.”
Find the African Catholic Bishops' Statement to the G7 here.